A new breed of smaller networks challenges larger holding companies

It was a call that Doug Burcin, president of Ashfield Healthcare Communications, had received before. A client made the decision to consolidate its business within a single holding company and, as a result, one of his network’s agencies was on the outside looking in. Burcin understood how the game was played — after all, he’d spent nearly two decades at Havas and predecessor Euro RSCG — but nonetheless lamented what he perceived as the client’s short-sightedness.

Not that long afterwards, his phone rang again. The client wanted back in.

“The client realized the holding company didn’t have the expertise,” Burcin says. “They got the overall business based on their creative and digital, then the client asked, ‘Can you bring in high science? Can you bring in medical affairs?’ And they couldn’t, because that’s not in their DNA.”

If you speak with the heads of Eversana, the Fishawack Group of Companies and Precision Value & Health — three networks that, like the UDG Healthcare-owned Ashfield, have been in heavy growth and acquisition mode over the last few years — you hear nearly identical stories. None of the four new breed networks think the big healthcare holding companies are going the way of the dodo bird anytime soon, but they believe that companies such as theirs are better suited to meet the needs of today’s increasingly science- and payer-focused clients.

“They still like the story that networks have been telling for years — ‘We’ve got all the different capabilities under one roof,’” says Oliver Dennis, CEO of Fishawack, the UK-based company that counts Dudnyk and Carling Communications among its recent acquisitions. “But the reality is, once clients started working with those networks, they found that all the different capabilities were siloed. The actual collaboration within the network wasn’t tangible.”

Eversana CEO Jim Lang, whose company unified The Access Group, Dohmen Life Science Services and others under its new corporate banner last October, agrees that traditional health networks aren’t sized or structured in a manner that makes as much sense for healthcare clients as it once did.

“All those agencies have great people doing cool things. This is not a defamation of those people and their intent,” he stresses. “I just think the [networks] were built by bringing in these various parts and keeping them separate. That works when you’re just a marketing company, but marketing problems are a lot less important to solve right now than pricing problems or market access problems.”

All four of the up-and-comer networks were built with such concerns in mind. Take Precision Value & Health, which started out as a managed-markets specialty play. When the company saw an opportunity to grow, it didn’t merely start accumulating assets for the sake of accumulating assets. Rather, it picked its spots before erecting the PV&H roof to formally house the larger, unified offering.

“The decisions were always driven by, ‘What’s the right collection of activities to showcase the value of medical innovations?’” says PV&H president Dan Renick. “The focus was on making sure patients can access and afford medical innovations, not on running commercials and trying to get them to talk to their doctors. This was never a scale play.”

“It used to be that clients would send their medcomms or creative agency a brief. Today, they tell us the problem they’re trying to solve and it’s up to us how we align around it. We’re set up to do that,” Dennis explains.

Lang says the newer model has particular appeal to what he calls “the innovative mid-market” type of client. “The top 25 is used to buying everything we do through separate agencies, but we’re getting traction in the mid-market and in the specialty pieces of bigger organizations. We can commit to them in a way others can’t.” Juno Therapeutics and AveXis are among the companies working with Eversana.

When people join us, they feel like they matter to the company.

Oliver Dennis, Fishawack Group of Companies

The new breed leaders claim that top agency talent similarly seems interested in pursuing the opportunities afforded within their less rigidly structured networks. Burcin talks about Ashfield’s “obsession” to “win the talent war, especially for high-science people” and promises a degree of fluidity and flexibility that he doesn’t believe his old network peers are able to match.

Dennis agrees, adding that smaller networks can also offer (very relative) intimacy vis-à-vis organizations with head counts well into the five-figures. “When people join us, they feel like they matter to the company. They’re not just someone who’s going to fill a capacity need in a large, rigid structure,” he says.

Which isn’t to say that the new breed model is for everyone. Renick notes agency execs used to protecting a given piece of turf sometimes aren’t easily able to shed that territoriality. “To do this right, everyone has to yield a little bit — to be open to having different people in meetings, as an example,” he explains. “You have to break down those fences. It’s never done with malice — it’s more ‘I’ve worked hard to get and keep this business’ — but it’s an obstacle you need to get past.”

It goes without saying that each of the new breed networks are keen to keep growing — and, in doing so, fill in what each organization perceives to be gaps in its offering. PV&H and Fishawack might look to add a healthcare PR component, while Ashfield and Eversana might try to bulk up their data/analytics offerings.

None of the network heads rule out snapping up more generalist and/or traditional agencies. Chatter in M&A circles has it that top targets and/or potential sellers could include at least three well-regarded independent agencies — Greater Than One, Calcium and DiD — though two of the three told MM&M in no uncertain terms that they aren’t on the block, formally or otherwise. The other, Greater Than One, shared a statement from president Kieran Walsh: “We prefer to be wholly independent so that we’re not beholden to anybody except our clients and ourselves.”

Ultimately, it’s a thin line these new networks will have to walk. They need to remain agile and flexibly structured, but such traits often become watered down as organizations grow. They need to acquire companies whose core competencies complement their own, but there are only so many of these organizations to begin with and fewer still that are amenable to being acquired — and who’s to say that the larger, more established networks aren’t eyeing purchases of their own?

The next 18 months should be telling. “I go back to what one of my old coaches always used to tell us: ‘Just play your game and worry about what you’re doing,’” Burcin says. “In our minds we’ve had a real coming out during the last year, but we still have a long way to go.”